I have had this problem with three different Windows 7 computers.
Is the operating system up-to-date? Have you tried updating the driver?
michinyon:
At what point in the upload process, should it be expected that the sketch already running on the Arduino should stop ?
Immediately after compiling. I believe, at the point the message "Uploading..." is displayed, the board should reset.
If the sketch already running on the Arduino is writing stuff to the computer through the serial/USB connection, does this interfere with the process of uploading the new sketch ?
It can. But not with the sketch you posted.
If you write a sketch which writes serial data to the computer, like this one ... And then I start the serial monitor, set the speed to 9600, and I see ... and then I close the serial monitor, and start the serial monitor again, then I don't see any tick.
Does the pin 13 LED continue to blink?
Have you tried a different USB cable?